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The movement of ozone and other pollutants by wind currents - a phenomenon known as interstate transport - can cause pollution levels to be elevated even in areas that do not have emission sources. To address this transport phenomenon, in 1990 Congress created the Ozone Transport Commission (OTC) directing the states in the Northeastern U.S. to collaboratively find a solution to the persisitent summertime ozone. The OTC set out to accomplish this goal in part by implementing a regional trading program for NOx (an ozone precursor) that covered 10 states.
In 1998, the U.S. EPA finalized the NOx SIP Call which concluded that NOx emissions in twenty-two states and the District of Columbia contributed to ozone nonattainment in other states due to transport. EPA's SIP call directed those states to reduce their emissions and offered the states the opportunity to participate in an expanded trading program called the NOx Budget Trading Program (NBP). Under the NBP the size of the trading region to increased to cover 20 states and the District of Columbia. Compliance dates varied by state with the last states joining the NBP in 2007. The states in the original OTC trading program joined the NBP.
In 2005 EPA promulgated the Clean Air Interstate Rule (CAIR) to continue to deal with interstate transport of ozone. CAIR also helps states in their efforts to attain compliance with the National Ambient Air Quality Standards for PM2.5 by reducing emissions of its precursors, NOx and SO2. CAIR accomplishes its goals by creating three separate trading programs: an annual NOx program, an ozone season NOx program and and annual SO2 program. CAIRs emission reduction requirements begin in 2009 for the NOx ozone season and and annual programs, and 2010 for the SO2 annual program.
On July 11, 2008 a three-judge panel of the U.S. Court of Appeals for the District of Columbia issued a unanimous 60-page decision vacating the entire Clean Air Interstate Rule (CAIR) (D.C. Circuit No. 05-1244 and consolidated cases). On December 23, 2008 the court issued an order lifting their vacatur of CAIR and remanding CAIR back to EPA to to conduct proceedings to fix the flaws in CIAR consistent with the court's July ruling. The court did not impose a schedule on EPA in its ruling.